Broker snap: Divi stocks back in vogue

22nd Feb 2010 13:06

Barclays Capital is advising its clients to buy 'high quality dividend stocks' as dividend yields trade close to historical highs relative to bond yields.'After the 60% rally since March 2009 led by financials and cyclicals, we have seen a reversal in style in the market over the last four weeks. Large-cap stocks [are] breaking out relative to small caps Defensive sectors have started outperforming cyclicals,' the investment banking arm of Barclays asserts 'The reversal in trend can also be observed in the bond market with AAA-rated bonds now starting to outperform high yield bonds,' it added.Barclays Capital (BarCap) has identified 20 European high quality dividend stocks, a list that includes UK stocks Cable & Wireless, RSA, BP, AstraZeneca, GlaxoSmithKline, Centrica, British American Tobacco, BAE Systems, Pearson, Unilever and British Sky Broadcasting. 'After a short period of underperformance during the low quality cyclical rally in early 2009, we see that our Quality Dividends [stocks] have started consolidating in terms of relative performance. We expect total return to bounce back, given our themes of a style rotation to high quality income generating stocks,' BarCap said.